Nokia to offload wireless modem business to Japan’s Renesas

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 “Nokia has apparently decided it is better to concentrate on more profitable aspects of the business,” Pal Zarandy, a senior partner at Rewheel, told NY Times.

Nokia’s modem business, an important part of its hardware business, has been hurt by Chinese competition. Moreover, prices for the devices have plunged over the last three years amid competition from Chinese players such as Huawei and ZTE.

Wireless broadband connections using LTE and HSPA+ technology accounted for 17 percent of all broadband connections in Europe at the end of 2009, and just 7.1 percent in the North American market, according to Berg Insight, a mobile telecommunications research firm in Sweden.

Huawei is the European market leader in wireless broadband modems, holding a market share of 53 percent, followed by ZTE, with 30 percent.

The deal is significant in view of rise in global semiconductor revenues which is expected to go up to $295 billion in 2011 and surpass $340 billion in 2014, according to International Data Corp. (IDC).

Mali Venkatesan, research manager, Semiconductors at IDC, said device applications such as smartphones, mobile PCs, media tablets, and automotive will show strong secular growth both in 2010 and 2011.

Renesas’ operations include research, development, design, manufacture and sale of semiconductor products. The merger of NEC Electronics and Renesas Technology created the world’s third-largest semiconductor company behind Intel and Samsung. Renesas Technology was a joint venture owned 55 percent by Hitachi and 45 percent by Mitsubishi Electric.